PricewaterhouseCoopers has agreed to settle a class-action suit with Tyco International shareholders for $225 million. The amount will be tacked on to Tyco’s own settlement with the investors for nearly $3 billion, announced one month ago.

Plaintiffs in the case against Tyco had charged that PwC was in a position to notice that Tyco had allegedly overstated its income by $5.8 billion between December 1999 and June 2002. According to the plaintiffs’ attorneys, PwC’s concession will bring the total settlement to more than $3.2 billion. They claim that it is one of the largest recoveries from an external-audit firm in a securities class-action suit.

PwC had been prepared to defend itself, David Nestor, a spokesman for the audit firm, told CFO.com, but “the cost of that defense and the size of the securities class action made settlement the sensible choice for the firm.” Another reason for settling the lawsuit was to maintain its business connections with all of the Tyco entities, he added. PwC stopped being Tyco’s auditor in 2003.

Two years ago, former Tyco chief executive officer Dennis Kozlowski and former CFO Mark Swartz were found guilty of grand larceny, securities fraud, conspiracy, and falsifying business records. They were found to have stolen hundreds of millions of dollars from the conglomerate by collecting unauthorized bonuses, making inappropriate loan transactions, and covertly selling shares while Tyco’s stock was overinflated.

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Tyco split itself into three separate companies last week.

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